The Financial Services Authority (FSA) has back-tracked on its tough mortgage lending criteria, which would have seen lenders carry out affordability assessments.
The FSA had previously stated that it would force mortgage lenders to carry out an affordability assessment when lending a 25-year repayment loan, the Independent reported.
Even if a borrower had wanted to take out a mortgage over a longer period than 25 years, or on an interest only basis, the criteria would still require an assessment to be carried out.
However, now the FSA acknowledges that different individual circumstances could prevent this from working as it had been previously planned.
They also stated that they do not intend on banning interest only mortgages, although a repayment plan will still be required before lenders accept these terms.
The new plan is for lenders to assess each individual case accordingly, and to ensure borrowers are able to afford the terms of the mortgage in the long term.
“We will seek the right balance between protection for consumers, sustainability of the market and consumer choice,” the FSA mortgage market review stated, as reported from the Independent.
When potential home owners are comparing the mortgage market, they will be looking for the best deal to suit their own individual situation. A popular means of ensuring they achieve this is to take the advice of a mortgage advisor.
However, if it then conspired that the homeowner could have got a better deal elsewhere, and was ill advised by the mortgage expert, they may find themselves in a worse position financially.
Figures from Shelter revealed more and more homeowners are struggling to meet the repayments on their mortgage.
If you think the financial advice you received when looking for a mortgage was insufficient, or downright wrong you could make a mortgage reclaim now by contacting Gladstone Brookes on 08000 461 826.